A number of SAPCA members from our Manufacturers Group have raised an important issue which is having a significant impact on the sports and play construction industry – the growing volatility in the supply of various products within the sector.
Many SAPCA contractors have already started to see changes in the availability and cost of a range of products and materials that are essential to construction projects. The issues, however, are not limited to our specific sector. For example, prices for plastics, man-made polymers and resins have been rising rapidly over the past few months. Meanwhile, a recent report by the Federation of Master Builders shows that 93 per cent of small and medium sized construction companies said that material prices were rising.
The volatility is caused by a “perfect storm” of various factors and issues, which are coming together to exacerbate the situation.
- Increased oil prices, and reduced availability of oil-derived chemicals essential to the production of sports and play surfaces (including synthetic turf and polymerics);
- Low yields of naturally produced raw materials;
- Competing demands for materials (particularly aggregates) and transport as a result of HS2;
- The various effects of dealing with Covid-19 and Brexit;
- Fluctuations in exchange rates; and
- Increased costs of steel, fuel, transport, packaging, etc.
Ironically, this “perfect storm” has also been made worse by an actual storm. The extreme weather experienced by large areas of the southern US – a region which is a huge source of oil and the various products derived from it – hit manufacturing capacity earlier this year (among those affected was Total Petrochemicals – part of the global conglomerate Total). It created a squeeze on a wide range of supplies, aggravating a problem that dates back to early 2020 and the beginning of the pandemic.
These disruptions and issues come at a time when sports facilities are reopening and the sports and play construction industry is experiencing an increase in demand. Many SAPCA members report that they are anticipating a particularly busy year ahead.
The issue has been noted by the national press too. In the 3 May issue of the Daily Telegraph, the lead story “Spending spree to send oil prices soaring” stated: “Oil and metal prices are poised to surge in coming months as Britain and the US launch a once-in-a-generation infrastructure spending spree and the global economy roars back to life.” It quoted one expert saying “Logistics, disruption, raw materials and Covid-19 working practices are all coming together to fuel inflation.”
The article also outlined how British factories are reporting the steepest increase in input prices for four years – and that manufacturers are, in turn, having to pass on these costs.
While there may be little that our industry can do to influence any of these economy-wide factors, SAPCA members will certainly do their best to mitigate any disruption. Contractors will always seek to secure the supply of products and materials for contracts that they have been awarded as early as possible. However, in many cases these will of course be supplied on a “first come, first served” basis.
All those involved in the development of sports and play facilities may find it helpful to take this situation into consideration when planning and managing their projects this year. For example, contractors and suppliers may be forced to review the periods of time that they are able to hold prices when giving quotations, and the timescales for project delivery may also be affected.
SAPCA will continue to monitor the situation closely during the weeks and months ahead. Please check our website for the latest news and information.